Common VA Loan Questions Answered

Posted on: March 2, 2018

Plenty of eligible home buyers don’t know what the VA loan is, and even those that don’t know everything about it. Many veterans have questions about the VA loan, but they don’t want to have to go to a lender to get answers.

Who is eligible for VA loans?

Most veterans and active duty service members are eligible. However, all veterans, active duty service members and National Guard members must meet certain requirements.

To be eligible, you must have met at least one of the following:

Served 90 consecutive days during wartime

Served 181 days during peacetime

Have more than six years of service with the National Guard or Reserves

Also, VA loans are available to the surviving spouses of military members who died in the line of duty.

How is a VA loan different from conventional or FHA loans?

For one, the VA loan is guaranteed by the VA. This is similar to FHA loans which are backed by another government organization. Conventional loans aren’t backed by anyone.

Another difference is that VA mortgage rates tend to be much lower than both FHA and conventional. In January of 2018, VA loans closed with an average rate of 4.10%, as compared to 4.36% and 4.37% for FHA and conventional, respectively.

How much can I borrow with a VA loan?

There are loan limits associated with VA loans. Currently, loan limits range from $453,100 to $453,100, depending on the area you are buying a home.

If a home you’re looking to buy is slightly out of this range, a downpayment can help close the gap. These are the maximum amounts you can borrow, not the maximum price of the home.

While it is possible to get a loan for a higher amount, many home buyers stay within this range to avoid using a non-VA mortgage product.

What credit score do I need to qualify?

Technically, you don’t have to have any minimum credit score to qualify for VA loans. However, most lenders will want to see a credit score of at least 620 before approving the mortgage. In some cases, VA home buyers can get approved with scores below 620.

Do I need to make a downpayment?

One of the biggest benefits of the VA loan is that no downpayment is required. The VA guarantees the mortgage, so you can secure 100% financing. It’s also possible to finance some of the closing costs or get the upfront costs covered by the seller.

Not only is it possible for VA home buyers to avoid a down payment, but it’s a popular option as well. In January, the average down payment on a home for closed VA loans was just two percent. Down payments aren’t required, but they can save you money on your monthly payments.

Do I need to pay mortgage insurance?

Another benefit of having the VA guarantee the mortgage is that you don’t have to pay mortgage insurance. Private mortgage insurance (PMI) or mortgage insurance premiums (MIP) are required for smaller down payments on conventional and FHA loans. But no matter how much you put down on a VA loan (if anything), you won’t have additional insurance payments.

How long is the VA loan process?

There’s no set-in-stone time limit for how long the VA loan process takes, but it does take slightly longer than other programs on average.

In January, the average VA loan closed in 50 days. By comparison, the average conventional loan closed in 46 days, and FHA in 48 days. So, for the most part, a VA loan will take slightly longer than other loan types, but not by much.

Can I only use a VA loan once?

This is a common myth with many VA eligible home buyers and homeowners. If you’re eligible for the VA loan, then you’re eligible for your entire life. Plenty of home buyers end up using the VA loan more than once, mostly because it’s arguably the best loan program out there.

How long does getting pre-qualified take?

Pre-qualification is the first step to buying a home. The process is incredibly quick, and it can be started online.

If you’re interested in buying a home at any point in the future, then getting pre-qualified is a good idea. You can get pre-qualified even if you don’t have a house in mind, or if you haven’t even started looking. A pre-qualification will give you a better idea of how much home you can afford, so you should do this before you start shopping around.

Full Beaker, Inc. is not licensed to make residential mortgage loans in New York State. Mortgage loans are arranged with third-party providers. In New York State it is licensed by the Department of Financial Services.